With more homeowners considering that now may be a good time to sell their home, we thought it would be a good idea to consider whether renting might be a better idea.
According to Fannie Mae’s June 2015 National Housing Survey, 52% of respondents said that now is a good time to sell. Perhaps more interestingly, 59% of respondents expect home rental prices to increase.
Naturally, when you are considering selling your home, and you notice rental prices elevating, you are likely to consider renting. And who wouldn’t? Residual income on an owned asset, or having your house work to pay for itself sounds pretty good, right? This is when it makes sense to ask the question:
Are You Ready to be a Landlord?
Before you jump head-first into the world of being a landlord, take a look at this list. Sometimes what seems to be an obvious benefit can come with some hidden challenges.
10 Questions to ask before renting your home
- If your tenant says they can’t afford to pay the rent this month because of more pressing obligations, how will you respond? (This happens most often during holiday season and back-to-school time when families with children have extra expenses).
- Because of the economy, many homeowners cannot make their mortgage payment. What percentage of tenants do you think cannot afford to pay their rent?
- Have you interviewed experienced eviction attorneys in case a challenge requiring one does arise?
- Liability is greater in a non-owner occupied home. Have you talked to your insurance company about a possible increase in premiums?
- Will you allow pets? Cats? Dogs? How big a dog?
- How will you actually collect the rent? Electronically? By mail? In person?
- Repairs are part of being a landlord. Who will take tenant calls when necessary and/or emergency repairs come up?
- Do you have a list of licensed tradesmen readily available to handle these repairs?
- How often will you do a physical inspection of the property?
- Will you alert your current neighbors that you are renting the house?
The Takeaway
If you are prepared to handle the responsibilities that come with being a landlord, renting your home could be a great investment. Historically, renting residential real estate has been just that. However, if you are planning to sell before too long, the responsibilities that can come with renting your home may make any short-term economic benefit not worth the hassle.